A Simple Tool for Getting Better Financial Advice

Originally in MoneyTrue story: Many years ago, I was meeting with a married couple for an initial data-gathering session. Halfway through the three-hour meeting — the first stage in developing a comprehensive financial plan — the husband excused himself for a bathroom break. As soon as the door shut, the wife turned to me and said, “I guess this is as good a time as any to let you know that I’m about to divorce him.”

What Is Your Fool’s Gold?

Originally in ForbesMy son gave me a present. To be fair, I don’t think it was until after he realized the gift was monetarily worthless, but I appreciated it nonetheless. It’s a big hunk of the mineral pyrite, also known as fool’s gold. My son’s gift has value to me far beyond its function as an excellent paperweight. And, ironically, its worth to me is continually rising. It’s become a constant reminder to orient my life away from that which only appears valuable and towards that which truly is.

We all have our own versions of fool’s gold. It’s generally the stuff that, while largely worthless, receives an undue amount of our time, attention and investment. What’s yours?

Here are three ways to spot it:

1)   Fool’s gold consumes time you’ve dedicated to other things. Not more than one paragraph into writing this post (on this topic, no less!) I found myself entering this Google search—“what is the best banjo ukulele”—and then navigating to this page, then this one.

The Real Danger In Overstating Returns (Like PIMCO)

Originally in ForbesAs if PIMCO needed any more bad press, The Wall Street Journal reported this week that the Securities and Exchange Commission is investigating whether the bond giant “artificially boosted the returns of a popular fund aimed at small investors.” While we should all be attentive to the results of this probe—because I’d bet my lunch money that its implications will be felt beyond just PIMCO—there is an even deeper issue to consider. And this issue has a more direct impact on our individual portfolios and money management choices. The real danger in overstating returns, and indeed the root of most financial missteps, is self-deception.

“How’s your portfolio?”

Who among us wants to feel like a failure? We’ll generally avoid experiencing this sensation at all costs. So, absent conspicuous success, we permit ourselves to believe that we’ve at least not failed, frequently through self-deception.

Lessons In ‘The Happiness Of Pursuit’ From Chris Guillebeau

Originally in Forbes“People have always been captivated by quests,” writes author Chris Guillebeau in his brand new book, The Happiness of Pursuit. Chris, for one, is most certainly one of those people. His book celebrates the completion of a personal quest to visit all 193 countries in the world before his 35th birthday.

PursuitAre the rest of us captivated by quests as well? Absolutely. But is the whole concept of questing, journeying and generally living life as an adventure something anybody can pursue? Or are we merely relegated to living vicariously through Chis and his band of fellow travelers? After all, the rest of us have obligations, right? Nine-to-five drudgery is a responsibility. To some, it’s even an honor. We’ve got spouses, kids, mortgages, car payments and PTA meetings. We can’t be gallivanting all over creation in search of enlightenment.

Or can we?

Chris has some pretty strong feelings on that—so strong that the stated lesson of the first chapter in his book is: “Adventure is for everyone.”

Perhaps it depends on how we define a quest? Here are Chris’ criteria:

  • “A quest has a clear goals and a specific end point.”
  • “A quest presents a clear challenge.”
  • “A quest requires sacrifice of some kind.”
  • “A quest is often driven by a calling or sense of mission.”
  • “A quest requires a series of small steps and incremental progress toward the goal.”

By these measures, running a marathon would assuredly be considered a quest for most. How much more, then, is John Wallace’s feat of running 250 of them—in a single year?

Wallace is one of many questers featured in The Happiness of Pursuit, but most of the others’ exploits are far less headline worthy. Chris endeavors to bring the notion of questing closer to home by featuring a largely “ordinary” cast of characters, and in so doing, he succeeds.

Dealing With the ‘Personal’ in Personal Finance

Originally in MoneyTo really help people, financial planners have to delve into the the feelings and emotions that drive their clients’ financial decisions. One planner explains why that’s so hard.

While most of us financial advisers want to do the best for our clients, we often struggle at the task.

The main problem, as I recently wrote: We don’t know our clients well enough. We may say that a client’s values and goals are important, but most of us don’t adequately explore these more personal (a.k.a. “touchy-feely”) parts of a client’s life.

Why is this? 

One reason we avoid deeper discovery with clients: No matter how we’re paid—whether by commissions or fees—most of us don’t get compensated until the financial planning process has neared its end. 

Mint.comSince shortly after its inception, I’ve been a fan of Mint.com and have recommended their powerful budgeting tool to anyone willing to listen.  The tool has changed so many lives that Mint.com has become a reputable personal finance source of news and information as well.  So when they asked if they could do an “Expert Interview” with me on the topic of human behavior and personal finance, it was an easy “yes” response.

Enjoy the interview here: “Expert Interview with Tim Maurer on Human Behavior and Personal Finance for Mint”

Date: July 23, 2014
Appearance: Interview with Magnetic Personal Finance Site, Mint.com
Outlet: Mint.com
Format: Other

Here’s Why People Ignore 80% of What Their Advisor Tells Them

Originally in MoneyI’ve heard it estimated that out of all the financial and estate planning recommendations that advisers make, their clients ignore more than 80% of them. If there’s even a shred of truth in this stat, it represents a monumental failure of the financial advice industry.

To explain why, let me tell you a story about a financial planning client I worked with a few years back. In one of our first meetings, she and I were reviewing her three most recent tax returns. As I discussed them with her, it became clear that the accountant who had prepared those returns — an accountant who had been recommended to her by her father — had filled them out fraudulently. A bag of old clothes that she had donated to charity became, on her Schedule A, a $10,500 cash gift. She also deducted work expenses for which she had already been reimbursed.

Pogo Stick Retirement Planning for Younger Generations

Originally in ForbesHistorically, retirement planning has been likened to a three-legged stool — consisting of a corporate pension, Social Security and personal savings. Baby boomers saw the pension fade from existence, leaving them to balance on retirement planning stilts. For younger generations, however, the retirement situation can seem even worse. Sometimes, it feels like it’s all on us. We’re left with only a retirement planning pogo stick.

Further complicating matters, doctors suggest that the length of life Generations X, Y and Millennials can expect may exceed that of our parents and grandparents. We’re likely to live a long time, but our quality of life — to the degree that it is improved by cash flow — is in question because of the heightened savings burden.

Last week, I shared two “silver bullets” — MOVE and WORK— for hopeful boomer retirees who may fear that a 14-year stretch of economic uncertainty has put their goal for a comfortable retirement out of reach. Here’s how these two concepts can be applied to younger generations:

The Scarcity Fallacy: Is Less Really More?

Originally in ForbesHaving the privilege of walking through life with people vocationally, aiding in the acquisition, maintenance and dispossession of earthly resources as a financial advisor, I’m burdened with a heightened sense of the battling spirits of scarcity and abundance.

The dehumanizing poverty that torments the Majority World screams that resources—here and now—are scarce. Remembering when I handed a bowl of vitamin-charged oatmeal to a boy who lives and breathes in La Chureca, the Nicaraguan squatter town subsisting off of Managua’s trash, I occasionally twinge at my willingness to pay $5 for a cup of premium Central American coffee. That expenditure could buy a week’s worth of mush, keeping children of the dump alive.

This is one of the children at the feeding center in "La Chureca," the city dump in Managua, Nicaragua.

This is one of the children at the feeding center in “La Chureca,” the city dump in Managua, Nicaragua.

How could I not consume less?

And share more?